Residents of Latvia want to tax old cars

By | October 4, 2020
Residents of Latvia want to tax old cars

From the next year, there may be a new tax on the registration of petrol or diesel vehicles older than 5 years in Latvia. Thus, the Ministry of Communications hopes to motivate Latvians to move, for example, to electric cars, reports Lsm.lv.

The Ministry refers to the fact that many European countries encourage their residents to move to environmentally-friendly electric cars. The Ministry is afraid that because of these old and more environmentally harmful cars in the local market will become even more – because, before the coronavirus pandemic, the Latvians were buying up used cars on a massive scale, which became unnecessary for their former owners in Western Europe. The statistics are as follows: last year 44 604 used cars older than 5 years were imported and registered in Latvia. This is 65.5% – two out of three – of all registered cars.

“These cars – especially diesel ones – have a very strong impact on our respiratory tract. Why? Because many of these cars – not all of them, of course – are not kept as they should be, because it is very expensive,” said Talivaldis Vectirans, Director of the Department of Motor Transport of the Ministry of Transport.
That is why, according to him, the government has decided to introduce a new tax on registration of cars older than 5 years in Latvia the day before. Its rate will depend on the age of the car, on the type of fuel (you will have to pay more for diesel than for gasoline, a little less for gas), as well as on the amount of CO2 emissions, or, if there is no such information at the disposal of the traffic police, the weight of the car.

“This whole situation has caused a feeling of deja vu,” confesses Ugis Vitols, president of the Association of Used Car Traders. He shows the 2000 issue of Dienas Bizness newspaper (“Business of the Day”) with the article “The excise tax failed”.

“At that time a huge excise tax on imported cars was introduced. A year later the government recognized that this excise tax stopped the development of the country’s car fleet,” Vitols recalls.
The entrepreneur is afraid that the negative consequences will continue now. The tax for cars weighing more than 3 tons will increase significantly, and this will affect small businesses that use minibusses. The tax will also slow down the development of the car market.

“The age of cars in Latvia is mainly 13-14 years, and cars younger than 2008 are the segment that slowly but still renews the Latvian car fleet. Here is the car of 2008. It weighs more than 2600 kg, and the tax for a car older than 10 years will be 920 euros. What does it mean? Either the consumer will pay this additional price for the car, or the merchant. It will be very bad, he will be forced to buy a car even worse for a lower price to offset this price increase due to the new tax. There may be different scenarios here,” says Vitols.
The new tax, according to the plan, will be levied as early as 2021. Annually, the Ministry of Communications hopes to collect about € 15 million from this tax. However, these changes have yet to be approved by the Latvian Saeima. According to the country’s energy and climate plan for 2021-2030, by 2030 in Latvia, 7% of transport should work on electricity or biofuels.

“Well, we have waited. A new round of development in Latvia – the state introduces a tax on poverty. It is not trying to fight this poverty, but just going to fine for it. Where the ears of the idea grow from – you can see it very well. Car dealers are not happy with the fact that 2/3 of cars bought in Latvia are used. But the solution to the problem lies in the first words of the plot – “many European countries subscribe to the transition of residents to electric cars. Theoretically, this falls under the “green” purposes of using the “carpet billions” allocated to Latvia. But no… The next logical step would be to increase the property tax for apartment buildings “above five years”. After all, what is worse for developers than car dealers?”, – comments the news Vadim Barannik, former Vice-Mayor of Riga, leader of the party “Alternative”.